The Industry and Business Risk excerpt states that, “Increased competition may lead to lower unit sales and excess production capacity and excess inventory. This may result in a further downward price pressure.” The downward price pressure could lead to inventory that is valued above current market prices or net realizable value. Any write-downs of inventory are least likely to have a significant effect on the inventory valued using:

A. weighted average cost.

B. first-in, first-out (FIFO).

C. last-in, first-out (LIFO).

ZP Corporation is a (hypothetical) multinational corporation headquartered in Japan that trades on numerous stock exchanges. ZP prepares its consolidated financial statements in accordance with U.S. GAAP. Excerpts from ZP’s 2009 annual report are shown in Exhibits J−L.

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EXHIBITJ Consolidated Balance Sheets ( millions) Year Ended 31 December Current assets Cash and cash equivalents E Inventories Total current assets E Total assets I Total current liabilities E Total long-term liabilities Minority interest in consolidated subsidiaries Total shareholders' equity Total liabilities and shareholders' equity 2008 542,849 608,572 4,028,742 1 10,819,440 3,980,247 E 2,663,795 218,889 3,956,509 10,819,440 2009 814,760 E 486,465 E 3,766,309 9,687,346 I 3,529,765 2,624,002 179,843 3,353,736 9,687,346